Madras HC Slams Puducherry Government Over 12-Year Delay | Orders ₹15 Crore Interim Payment In Waste Management Arbitration Case
Sanchayita Lahkar
The High Court of Madras Single Bench of Justice D. Bharatha Chakravarthy directed the Government of Puducherry to pay a sum of ₹15 crores to the petitioners by 31st July 2025, in partial compliance with an arbitral award. The Court held that the writ petition was maintainable despite the existence of alternative remedies, considering the prolonged non-payment since the execution of the contract. It further directed that for the remaining awarded amount, the petitioners may pursue available remedies. The connected contempt petition was closed in view of the relief granted in the writ petition.
The matter originated from a dispute regarding the execution of a contract for solid waste management in Puducherry. Expressions of Interest were invited on 03.09.2009 by various local bodies, collectively referred to as "POMS". The project involved the collection, transportation, processing, and landfilling of municipal solid waste. The total investment was valued at ₹108 crores, with ₹49.66 crores funded under the JnNURM scheme and the remaining ₹58.34 crores to be raised through a special purpose vehicle.
The first petitioner, M/s. Reha Environ Private Limited (formerly M/s. Kivar Environ Pvt. Ltd.), was declared the successful bidder, and the second petitioner, Puducherry Municipal Services Private Limited, was formed as the special purpose vehicle. A concession agreement was signed on 18.10.2010, fixing the tipping fee at ₹1746 per tonne with an annual escalation of 5%. The project was operational until March 2012, after which the agreement was terminated on 23.08.2013 due to disputes.
The arbitral tribunal, constituted under the Arbitration and Conciliation Act, passed an award on 10.02.2022 and amended it on 31.03.2022. The tribunal rejected the counterclaims of the Government of Puducherry and awarded:
- ₹2.48 crores as the outstanding mobilisation grant
- ₹25,53,42,384 as tipping fee
- ₹31,09,79,870 as termination benefits
- Interest at 6% per annum on applicable components
Subsequently, Execution Petition E.P.SR.No.12219 of 2022 was filed on 04.11.2022, followed by Arb.O.P.(Comm.Div).No.587 of 2022, challenging the denial of interest on certain claims. Both petitions were transferred to the file of the Principal District Judge, Puducherry. A further Execution Petition, E.P.No.37 of 2024, was filed on 01.08.2024 and remains pending.
Additionally, the first petitioner filed O.M.P.(ENF).No.2034421 of 2022 before the Delhi High Court, and an appeal was filed in O.S.A.(CAD).No.132 of 2024 before the Division Bench of the Madras High Court. Proceedings before the Division Bench involved multiple adjournments between December 2024 and March 2025 as the parties attempted to explore settlement.
Meanwhile, W.P.No.27581 of 2023 was filed seeking enforcement of the arbitral award through writ jurisdiction. On 21.09.2023, an interim order was issued, directing the Government of Puducherry to state its stance on payment. Alleging willful disobedience of the said order, the petitioners filed Cont.P.No.3821 of 2024.
The respondents argued that since an execution petition was pending, the writ petition was not maintainable. They contended that there had been no willful disobedience and that the Government continued to negotiate a settlement. The petitioners maintained that the arbitral award was final and binding as it had not been challenged, and they sought direction for payment in the writ proceedings.
The court stated that “This is not a case where the petitioner can be left to pursue the alternative remedies without any relief whatsoever.”
The Court noted that although the general principle is that arbitral awards must be enforced through execution under Section 36 of the Arbitration and Conciliation Act, 1996, the present case involved extraordinary circumstances. It observed that the petitioners had not received any payment despite the award being passed more than two years ago and multiple legal proceedings being initiated.
“A litigant with a decree in his favor should not be made to run from pillar to post without realizing at least a portion of the decreed amount.”
The Court considered the nature of the contract—solid waste management being a core public function—and the lapse of more than 12 years since its execution. It noted that the Government of Puducherry had failed to challenge the award and continued to delay payment on one pretext or another.
“Even when the State claims it is negotiating to settle the matter… this Court believes that this is not a case where the petitioner can be left to pursue the alternative remedies without any relief whatsoever.”
It referred to the Bombay High Court’s decision in Rustam Phiroze Mehta v. State of Maharashtra and the Supreme Court’s affirmation of that judgment, holding that constitutional courts must not disregard violations of binding arbitral awards, especially when committed by the State.
The Court also noted that ₹2.48 crores (mobilisation grant) and ₹25.53 crores (tipping fee) constituted admitted dues based on measurable tonnage, and were distinct from the ₹31.09 crores awarded as termination benefits.
“Of the said award amount, a sum of ₹31,09,79,870/- is designated for the termination benefit, which is in the nature of damages… a sum of ₹2.48 crores representing the mobilisation grant and a sum of ₹25,53,44,384/- is granted towards the admitted amount due.”
Accordingly, the Court found that an interim payment of ₹15 crores could be directed in exercise of its jurisdiction under Article 226, without affecting the pending execution and appellate proceedings.
The Court directed that the respondents shall pay a sum of ₹15 crores to the petitioners on or before 31st July 2025.
The Court further directed that with respect to the remaining sums awarded under the arbitral award, including principal and interest, the petitioners are to pursue alternative remedies already available to them, including proceedings pending before the Hon’ble First Bench and before the executing courts.
The Court ordered that there shall be no order as to costs in the writ petition.
In view of the relief granted in the writ petition and the representation made by the Government of Puducherry regarding ongoing communication with the petitioners, the Court held that it was unnecessary to proceed with the contempt petition. Accordingly, the Contempt Petition in Cont.P.No.3821 of 2024 was closed.
Advocates Representing the Parties
For the Petitioners: Mr. Anirudh Krishnan
For the Respondents: Mr. Ramaswamy Meyyappan, Government Advocate (Puducherry), Mr. T. P. Manokaran, Senior Counsel with Mr. T. M. Naveen
Case Title: M/s. Reha Environ Private Limited & Anr. v. Government of Puducherry & Ors.
Neutral Citation: 2025:MHC:1195
Case Number: Cont.P.No.3821 of 2024 and W.P.No.27581 of 2023
Bench: Justice D. Bharatha Chakravarthy
[Read/Download order]
